Physical and transition climate risk as portfolio-wide exposure.
The Commission’s package sets a 3°C reference path for planning and notes that historically only a quarter of EU natural-catastrophe losses were insured.
Two UN reports on 27 October show a wide pledge gap and record greenhouse-gas levels, testing net-zero portfolio plans 13 days before COP31 opens.
A framework for how universal owners approach climate risk in 2026 — distinguishing physical from transition risk, correcting the underpricing of physical risk, and treating climate as a systemic exposure.
Transition risk is the financial risk to investments from the move to a lower-carbon economy: policy, technology, market and reputational shifts that can strand assets and reprice sectors. Here is how it differs from physical risk and how owners manage it.
Physical climate risk is the financial risk from the changing climate itself, acute events like floods and storms and chronic shifts like heat and sea-level rise. Here is how it reaches portfolios, why it is hard to model, and how owners assess it.
Our research hub on climate, nature and the energy transition as financial risks for long-horizon investors: systemic and physical risk, transition risk, net-zero portfolios, nature and natural capital, and how owners respond.
For an investor that owns the whole economy, climate change is not an asset to trade around but a system-level risk that cannot be diversified away. Here is why universal owners treat it as financial, and what they can actually do about it.
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